Correlation Between Petroleo Brasileiro and Creative Sensor
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Creative Sensor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Creative Sensor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Creative Sensor, you can compare the effects of market volatilities on Petroleo Brasileiro and Creative Sensor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Creative Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Creative Sensor.
Diversification Opportunities for Petroleo Brasileiro and Creative Sensor
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petroleo and Creative is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Creative Sensor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Sensor and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Creative Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Sensor has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Creative Sensor go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Creative Sensor
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.71 times more return on investment than Creative Sensor. However, Petroleo Brasileiro Petrobras is 1.4 times less risky than Creative Sensor. It trades about -0.02 of its potential returns per unit of risk. Creative Sensor is currently generating about -0.33 per unit of risk. If you would invest 1,381 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would lose (20.00) from holding Petroleo Brasileiro Petrobras or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Creative Sensor
Performance |
| Timeline |
| Petroleo Brasileiro |
| Creative Sensor |
Petroleo Brasileiro and Creative Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Creative Sensor
The main advantage of trading using opposite Petroleo Brasileiro and Creative Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Creative Sensor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Creative Sensor will offset losses from the drop in Creative Sensor's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor vs. WiseChip Semiconductor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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